Could the NFL Lockout Impact Aston Villa?

The bloom may be off the rose for Randy Lerner at Aston Villa, and the ongoing NFL lockout could cause more problems for the Premier League squad.

Lerner earned praise from Villa fans when he took over the team in 2006, but after three consecutive sixth-place finishes in the league, Aston Villa dropped to ninth this season. And things could be getting worse. According to a March article in The Guardian, Lerner has put more than £200m into the club in his five years of ownership. And while revenues have grown – from £37.2m in 2006-07 to £90.9m in 2010 – so have the team’s salaries.

According to The Guardian, Villa’s salary payments amounted to £22.4m in Lerner’s first year, or 60 percent of the club’s turnover. Today they have reached £79.9m, or nearly 88 percent, of the club’s total revenues. And the team is burning through Lerner’s fortune, estimated at about $1 billion by Forbes in 2010. Lerner has injected the team with £115.6m in equity and another £89.6m has come in through shareholder loans.

Now the team looks like it will have to sell Ashley Young, as they are expected to complete a £16million transfer of the England winger to Manchester United later this month.

This is where the ongoing labor issues in the NFL come into play.

The league and its players are currently fighting over how to divide $9 billion in annual revenues. And while no one is losing money yet, that will change if any games are missed this fall. No games mean no TV revenue, no gate receipts, no concessions – no incoming funds of any kind. And as Lerner also owns the NFL’s Cleveland Browns, that’s a major hit to the bottom line – no matter how much you are worth.

While the finances of the Browns and Aston Villa are not directly linked, it doesn’t seem realistic to look at one without the other. If Lerner continues to reach into his right pocket to support Villa, while also seeing money taken out of his left pocket because of the NFL lockout, when does he start to believe enough is enough? And if he reaches his breaking point, does he decide to sell one of the teams? If so, which one?

Lerner didn’t buy the Browns – his late father, Al, purchased the team and Randy Lerner inherited them when his father passed away. But Lerner chose to buy Aston Villa because of fond memories he had for the team while attending college at Cambridge. So while his heart may be in Birmingham, his head could be in Cleveland. With no salary cap in the Premier League and Villa Park only seating a little over 42,000, it’s hard to see how Aston Villa can compete with big-money teams like Manchester United, Arsenal and Chelsea without Lerner continuing to dig into his pockets.

NFL teams, on the other hand, have costs certainty built in with revenue sharing and a salary cap.

We’d hate to see Lerner have to make that kind of hard decision. We’ve always thought of him as the perfect kind of owner – one who has money and is willing to spend it, while also hiring knowledgeable people and letting them do their job without interfering.

But at the end of the day, no matter how much he may love Villa, he’s still a businessman. And that businessman may realize the time has come to end his European vacation.

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9 Comments

timJune 7, 2011

TV revenue will be paid to the owners this year regardless of a lockout or missed games. That was part of the basis for the lawsuit that owners had decided on a lockout this year by negotiating tv money regardless of a lockout.

EITHER way its plain to see the premier league business model is out dated and until that changes Lerner will have to keep fronting the club its asthonishong to me that “the worlds most popular league” isn’t raking in the money. There’s no way turnover should be 80% nothing can survive at those numbers they need to reinvest in youth or find cheaper talent.The scariest part is in this economy who would he sell the club too?

Lerner has -effectively- pulled the trigger and is the process right now of hiring a new manager. The manager closely associated with allowing Villa’s wage bill to skyrocket surprisingly walked out four days before the 2010-11 season was to start.

Aston Villa’s stadium, Villa Park, might only seat 42,000 but that is not where the finances are. As they complete in the top tier of English football, the most watched league in the world, the television rights revenue shared amongst these teams is astronomical. Quite how they all run at a loss every year is best left to the economists however.

Randy Lerner is a model owner for an EPL team, if only in his treatment of the media alone. I love the way that people struggle to get info out of the club–they refuse to comment on anything until the deal is done. It’s pure class. Even Dave Whelan said that they acted accordingly when they tried to approach WAFC about Martinez.